EY: Customers’ Lack of Trust Is Eroding Bank Relevance

Forty percent of 55,000 consumers surveyed worldwide report decreased dependence on their traditional bank and increased excitement about alternatives, according to the EY 2016 Global Consumer Banking Survey.

A lack of trust, changing consumer behaviors and expectations set by digital innovators and increased competition from new players are eroding traditional banks’ relevance. Globally, retail banks scored just 75.1 out of a maximum value of 100 on the inaugural EY Bank Relevance Index (BRI), which evaluates how customers interact with banks now, and how they expect to in the future.

In the Asia-Pacific region, bank relevance varies significantly amongst the countries surveyed, with ASEAN countries possessing some of the lowest scores in the region. (For instance, Indonesia came in at a BRI of 66.9 or the second lowest globally, followed by Malaysia at 72.2 and Singapore at 74.1).

Consistent across the ASEAN countries surveyed, retail banking customers are typically less likely to consider engaging with a traditional bank for their financial products in the future than they do currently.

Reconsidering Current Practices

liew nam soon 500

«Traditional banks need to reconsider current practices to maintain relevance with an increasingly disenchanted consumer base. Globally, 42 percent of consumers have used non-bank providers in the last 12 months, and 21 percent who have not yet used them plan to do so in the near future,» Liew Nam Soon (pictured above), EY ASEAN Financial Services Leader, said.

«Within ASEAN, we’re in the age of the millennials with a fast growing base of digitally savvy banking customers,» he added.

Embracing The Product Offerings

For example, the survey shows that 82 percent of Indonesia customers are open towards the emergence of new online only financial services providers that compete with traditional banks, followed by 64 percent for Malaysia and 60 percent for Singapore.

This compared with the global average of 54 percent shows that the emerging markets are seen to be embracing the product offerings by the fintechs more so than the established ones.

Four Ways For Traditional Banks to Improve Relevance Among Consumers

  • Build and earn trust, not only in a bank’s ability to securely look after customers’ money, but in the ability to always do the right thing for the consumer and provide unbiased, high-quality advice.
  • Better understand individual customer behaviors and attitudes and apply analytics to tailor personalized propositions to different types of customers to serve a «customer of one».
  • Rethink distribution and customer engagement, in particular the role of branches and customer journeys across channels.
  • Innovate like FinTechs to radically simplify products and deliver on exceptional customer experiences.

Liew concludes: «Banking customers still see the intrinsic value of traditional retail banks though they recognize that the advance of technology has made it much easier to gain access to different financial products offered by multiple providers. In order to discourage customers from defecting to alternative financial providers, banks need to understand and address consumers’ needs and expectations for personalization, convenience, simplicity and transparency.»

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